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Directors Report of Kirloskar Pneumatic Company Ltd.

Mar 31, 2016

The Directors have pleasure in presenting this Report with Audited Annual Accounts of the Company for the year ended 31st March, 2016.

FINANCIAL RESULTS

The financial results for the year ended 31st March, 2016 are summarized below:

(Figures in Rs)

2015-16 2014-15

Gross Profit 707,344,638 473,218,544

Less:

Depreciation and Amortization 190,896,678 189,026,949

Provision for Taxation 152,659,839 58,439,009

Profit after tax 363,788,121 225,752,586

Surplus from previous year 199,396,763 195,809,253 Add / (Less)

Transferred to General Reserve 270,000,000 144,794,186

Interim Dividend Paid 89,910,366 -

Proposed Dividend - 64,221,690

Tax on Dividend 18,228,460 13,149,200

Retained Earnings 185,046,058 199,396,763

FINANCIAL PERFORMANCE

Your company achieved a total revenue of Rs. 5,299.78 million for the financial year 2015-16, against last year''s Rs. 4,601.42 million - an increase of 15%. Your company also earned a net profit of Rs. 363.79 million for the financial year 2015-16, against last year''s Rs. 225.75 million - an increase of 61%.This is a result of improved sales, improved inventory turns, reduction in debtors and overall improvement in operating efficiency.

The Government has been taking various steps to promote the manufacturing sector like ''Make in India'' programme etc. and though these measures have created a favourable market sentiment, it is our opinion that it would take some more time for changes to be visible at ground level. In the capital goods industry, we largely depend upon the revival of core sectors like Oil & Gas, Cement, Steel and Power etc. but there has been no significant investment yet in these sectors.

Considering this scenario, the Company is putting in more efforts in its international initiatives while focusing on improving the domestic market share.

DIVIDEND

The Board of Directors had declared an interim dividend of Rs. 7/- (70%) per Equity Share of Rs. 10/- each for F.Y. 2015-16 at its meeting held on 14th March, 2016 and the same has been paid to eligible members and/or beneficial owners. In lieu of this, Board does not recommend any further dividend by considering the interim dividend paid as final dividend.

FIXED DEPOSIT

The Company had discontinued accepting fixed deposits since 2001-02. As such as of 31st March, 2016 there are no fixed deposits outstanding.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

No Loans, Guarantees or Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given / provided / made during the reporting year.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

COMMENTS ON AUDITORS'' REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s P G Bhagwat & Co., Statutory Auditors in their Audit Report except a modified opinion in respect of application for approval to the Central Government for waiver of recovery of payment of excess remuneration paid to Executive Chairman, details of which are given below.

During the year, Company had made an application to Central Government (The Ministry of Corporate Affairs) seeking approval for the remuneration payable to the Executive Chairman due to inadequacy of profits for the financial year 2014-15. The Ministry of Corporate Affairs vide its letter dated 15th January, 2016 rejected the application on the ground that Company had paid remuneration exceeding 5% of net profits to the Executive Chairman during the financial years 2012-13 & 2013-14 without obtaining prior approval of the Central Government and further directed recovery of excess remuneration paid amounting to Rs. 20.04 million (Rs.13.10 million net of tax). Company was advised to make an application to the Central Government for seeking waiver of recovery of this amount and accordingly Company has made the requisite application to the Central Government. The said application is pending for approval and therefore Company has not recovered any amount nor accounted it as recoverable in the books of accounts as on 31st March, 2016. Your Company is also seeking approval of Members by way of postal ballot for the same.

There are also no qualifications, reservations or adverse remarks in the Secretarial Audit Report of M/s SVD & Associates, Partnership firm of Company Secretaries.

ENERGY CONSERVATION

Every year your Company adopts the best available technology and enhances energy efficiency of its operations to reduce energy consumption. Your Company is continually improving its operations to become more energy efficient. It also works on minimizing waste generated and adopting 5R (Reduce, Reuse, Recycle, Refuse & Recover) practices to reduce the impact on environment.

Your Company celebrates Energy Conservation Week and Environment Day every year. Your Company also organises various programmes on global warming, green house gas emissions (GHG emission), compressed air leakage, water conservation, e-waste recycling to create awareness amongst employees and society.

AWARDS

During the year under review, your Company has been appreciated for ENCON efforts by :

- 1st prize at 9th State Level EC Award to Hadapsar plant for financial year 2014-15 from MEDA (Maharashtra Energy Development Agency);

- National award by CII for Energy Efficient unit to Hadapsar plant; and

- Certificate of Merit to Saswad plant in National Energy Conservation Award 2015 competition by Government of India.

During the year under review, your Company has received:

- Gold Award Trophy in Quality Improvement Success Stories in Competition organized by Quality Circle Forum India.

- Awards in the 29th National Convention on Quality Concepts - NCQC2015 organised by QCFI.

- 2 Nos. "Par Excellence Award Trophy".

- 2 Nos. "Excellence Award Trophy".

- "Certificate of Merit" in recognition of its significant progress in Total Quality Management in Ravi Kirloskar Quality Prize for Business Excellence - 2014-15.

- "Supplier of EHS Excellence Award" received from GE Oil & Gas for the excellent and consistent performance in EHS practices for the last 4 years.

DIRECTORS

Dr Aditi Pant was appointed as an Independent Director on the Board in the last Annual General Meeting held on 29th July, 2015.

The Board of Directors have co-opted Dr Ajay Kumar Dua as an Additional Director on the Board with effect from 14th March, 2016. He ceases to be a Director at the ensuing Annual General Meeting and being eligible offers himself for appointment as an Independent Director for a period of 5 years. Details of the proposal for appointment of Dr Ajay Kumar Dua are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 41st Annual General Meeting.

The Company has received notice in writing proposing his candidature for the office of Director. The necessary resolution for his appointment is being placed before you.

Your Company has received necessary declarations from all its Independent Directors stating that they meet the criteria of independence as provided in Sub-section (6) of Section 149 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Mr Rahul C Kirloskar, Executive Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

Mr Rahul C Kirloskar, Executive Chairman has been appointed as Whole Time Director designated as Executive Chairman upto 22nd January, 2017. He is further appointed as Whole Time Director designated as Executive Chairman for a period of 5 years with effect from 23rd January, 2017 subject to approval of Members in the ensuing Annual General Meeting. Details of the proposal for appointment of Mr Rahul C Kirloskar are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 41st Annual General Meeting.

Mr Aditya Kowshik, Managing Director has been appointed as Managing Director upto 23rd October, 2016. He is further appointed as Managing Director for a period of 3 years with effect from 24th October, 2016 subject to approval of Members in the ensuing Annual General Meeting. Details of the proposal for appointment of Mr Aditya Kowshik are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 41st Annual General Meeting.

Board Evaluation

The annual evaluation framework for assessing the performance of Directors comprises of the following key areas:

a) Attendance for the meetings, participation and independence during the meetings.

b) Interaction with Management.

c) Role and accountability of the Board.

d) Knowledge and proficiency.

e) Strategic perspectives or inputs.

The evaluation involves assessment by the Nomination and Remuneration Committee and Board of Directors. A member of the Nomination and Remuneration Committee and Board does not participate in the discussion of his / her evaluation.

Directors Appointment and Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee framed a ''Remuneration Policy'' for selection and appointment of Directors and for their remuneration. The Remuneration Policy is annexed as Annexure "1".

Number of Meetings of the Board

A calendar of meetings is prepared and circulated in advance to the Directors. During the year, five Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Directors'' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanation obtained by them, the Directors in terms of clause (c) of Sub-section (3) of Section 134 state that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there have been no material departures.

(b) Accounting policies as mentioned in notes to the financial statements have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the year ended on that date.

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

(d) The annual accounts have been prepared on a going concern basis.

(e) Proper internal financial controls have been laid down for the Company and that such internal financial controls are adequate and are operating effectively.

(f) Proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

AUDITORS

a. Statutory Auditors

The Auditors of the Company, M/s P G Bhagwat, Firm Registration No. 101118W, Chartered Accountants, Pune, retire at the conclusion of the ensuing Annual General Meeting. As per Section 139 and other applicable provisions of the Companies Act, 2013 and rules made thereunder, M/s P G Bhagwat, Firm Registration No. 101118W, Chartered Accountants, Pune are eligible for re-appointment for a term of five years from the conclusion of 41st Annual General Meeting till the conclusion of 46th Annual General Meeting subject to ratification at every Annual General Meeting. The requisite certificate pursuant to Section 139(1) of the Companies Act, 2013 has been received by the Company from M/s P G Bhagwat, Chartered Accountants. Resolution seeking Members approval for re-appointment of M/s P G Bhagwat, Chartered Accountants, Pune, is included at Item No. 4 of the Notice convening the 41st Annual General Meeting.

b. Cost Auditors

The Board of Directors had, on the recommendation of the Audit Committee, appointed M/s Sudhir Govind Jog, a proprietary firm of Cost Accountant to audit the cost accounts of the Company for the financial year 2016-17 on a remuneration of Rs 5 Lacs.

As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Members'' ratification for the remuneration payable to M/s Sudhir Govind Jog, a proprietary firm of Cost Accountant for the year ended on 31st March, 2017 is included at Item No. 5 of the Notice convening the 41st Annual General Meeting.

c. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s SVD & Associates, a partnership firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure 2".

CORPORATE GOVERNANCE

The Company endeavors to maximize the wealth of the shareholders by managing the affairs of the Company with a pre-eminent level of accountability, transparency and integrity. A report on Corporate Governance including the relevant Auditors'' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Regulation 34 (3) read with Part E of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 alongwith Management Discussion and Analysis is annexed and forms part of the Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under Sub-section (3) of Section 92 of the Companies Act, 2013 is annexed as "Annexure 3".

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions except the transactions as mentioned in form AOC 2, which were entered into during the financial year were on an arm''s length basis and in the ordinary course of business. The said form AOC 2 is annexed as "Annexure 4".

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The statement that the transactions are at arm''s length and in the ordinary course of business is supported by a certificate from the Managing Director. The Company has also obtained the certificate from a Chartered Accountant on periodical basis.

All Related Party Transactions have been placed before the Audit Committee for their approval and to the Board, as and when required. In certain cases prior omnibus approval of the Audit Committee is obtained on a yearly basis. The transactions entered into pursuant to the omnibus approval so granted are reviewed by the Audit Committee on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. The scope of the Internal Audit is decided by the Audit Committee and the Board. To maintain its objectivity and independence, the Board has appointed an external Auditor, which reports to the Audit Committee of the Board on a periodic basis.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies for various functions of the Company. Based on the report of Internal Auditor, process owners undertake corrective action wherever required in their respective areas and thereby strengthen the controls further. Audit observations and actions taken thereof are presented to the Audit Committee of the Board.

During the year, Internal Financial controls laid down by the Board were tested for adequacy & effectiveness and no reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information. Statutory Auditors have also certified adequacy of internal financial controls system over financial reporting.

RISK MANAGEMENT

The provisions related to the Risk Management Committee of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable to the Company. However the Company has a Corporate Risk Management Committee and Segment Level Risk Committees. The Company has a Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The risk framework defines the risk management approach across the enterprise at various levels. To strengthen the risk management framework, Company has formed segment level risk committees to identify, analyze and mitigate the potential risks. The segment level risk committees report to the Corporate Risk Management Committee. The Corporate Risk Management Committee reports to the Audit Committee and the Board.

SUBSIDIARY COMPANY

As on 31st March, 2016, the Company had one wholly owned subsidiary and an associate company.

Kirloskar RoadRailer Limited is a Wholly Owned Subsidiary of the Company. The Subsidiary Company is set up for providing RoadRailer Services. Your Company expects that the RoadRailer services will commence from the current financial year.

Kirloskar Chillers Private Limited is an Associate Company. The Company is engaged in manufacture of a wide range of chillers i.e. Centrifugal Screw and Reciprocating and their Spares and After Sales Service. During the year under review, the net revenue of Kirloskar Chillers Private Limited is Rs 822.24 million and profit after tax is Rs 75.45 million.

In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company which includes its subsidiary and associate Company and forms part of the Annual Report. A statement containing salient features of the subsidiary and associate Company is also included in the Annual Report.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company containing therein its standalone and consolidated financial statements has been placed on the website of the Company namely www.kirloskarkpcl.com

CORPORATE SOCIAL INITIATIVES

As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Promoting Education, Health and Sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013.

Sanitation, being a national agenda, your Company has taken initiative to create awareness about WaSH (water, sanitation and hygiene) among 8000 school children from 17 nearby schools by deploying 110 employee volunteers and training these volunteers to implement various WaSH modules throughout the academic year.

Your Company has provided preventive health care to 15000 school children from nearby 12 schools (8 schools in the vicinity of Hadapsar Plant and 4 schools in the vicinity of Saswad Plant) by offering them eye check up. Refractive error was identified in about 750 students who were given free spectacles, thus significantly improving their vision.

To create awareness about HIV AIDS in the general community (approximately reaching out to about 3000 people) by way of campaigns conducted by training 20 GET (Graduate Engineer Trainee) volunteers. HIV Positive Boot Camp was conducted to induct and train these GET volunteers and in turn HIV AIDS awareness campaigns were conducted for 1000 members of the general community and 2000 students from 5 Junior Colleges.

Your Company has contributed an amount of Rs 7.50 million by way of donation to the Corpus Fund of KIAMS for education, health and sanitation.

CSR Policy in brief:

The focus of CSR activities will be on Education, Environment and Health.

While devising projects, care should be taken to promote the education, health and sanitation, protect the environment and minimize adverse impact, if any, on the society at large.

The Company is committed to uphold the interests of all the stakeholders by implementing the various guidelines like business excellence models.

The Company shall spend at least 2% (two percent) of the average net profits, calculated in accordance with the provisions of the Companies Act, 2013, and Rules thereunder, made by it in three immediately preceding financial years, in every financial year.

Any income or surplus arising out of CSR activities undertaken by the Company will form part of the corpus earmarked for CSR activities.

Any surplus arising out of any of the CSR activities carried out by the Company will not be treated as part of the business profits of the Company.

The Annual Report on CSR activities is annexed herewith as "Annexure 5".

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure 6".

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report.

PARTICULARS OF EMPLOYEES

Disclosures with respect to the remuneration of Directors and Employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been annexed as Annexure 7 to this Report.

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are available at the Registered Office of the Company during working hours for a period of 21 days before the Annual General Meeting and shall be made available to any shareholder on request.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company is an equal opportunity employer and consciously strives to build work culture that promotes dignity of all employees. Awareness programmes were conducted across the company to sensitize the employees to uphold the dignity of their colleagues at their workplace, mainly with respect to prevention of sexual harassment.

Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14 of the Rules issued thereunder, an Internal Committee constituted under the said Act has confirmed that no complaint / case has been filed / pending with the Company during the year.

EMPLOYEES

Your Company has taken several initiatives for Human Resource development and retention. Manpower planning by classifying them into Frontend, Internal and Support functions is under way. Competency mapping, identifying training needs through the 70-20-10 format, career counseling and Management Development Programs are some of the initiatives adopted by your Company. T raining programmes are designed to enhance skills, knowledge and behaviour. Employees are motivated through empowerment and rewards for good performance. Adoption of 5S across the Company has led to a clean and healthy environment. Though the Employee Engagement score has reduced slightly from 71% to 68%, the Company has a benchmark score on 11 out of the 21 engagement drivers.

Your Company has 817 permanent employees on its rolls as on 31st March, 2016.

ACKNOWLEDGEMENT

The Directors wish to convey their appreciation to all your Company''s employees for their enormous personal efforts as well as their collective contribution to your Company''s performance. The Directors would also like to thank the shareholders, customers, dealers, suppliers, bankers and all other stakeholders for their continued support and their confidence in its management.



For and on behalf of the Board of Directors

sd/-

Place : Pune Rahul C Kirloskar

Date : 27th April, 2016 Executive Chairman

DIN 00007319


Mar 31, 2015

THE MEMBERS

The Directors have pleasure in presenting this Report with Audited Annual Accounts of the Company for the year ended 31 March, 2015.

FINANCIAL RESULTS

The financial results for the year ended 31 March, 2015 are summarized below:

(Figures in Rs) 2014-15 2013-14

Gross Profit 473,218,544 746,791,697

Less:

Depreciation 189,026,949 132,140,425

Provision for Taxation 58,439,009 226,350,955

Profit after tax 225,752,586 388,300,317

Surplus from previous year 195,809,253 207,781,268

Add / (Less)

Transferred to General Reserve 144,794,186 250,000,000

Proposed Dividend 64,221,690 128,443,380

Tax on Proposed Dividend 13,149,200 21,828,952

Retained Earnings 199,396,763 195,809,253

Financial Performance

The year 2014-15 has been a very challenging year for your Company. As your Company is primarily a capital goods equipment manufacturer, lack of investments in major sectors like Oil & Gas, Power, Steel, Cement, Railways and Defence has impacted the revenues of your Company.

The drop in oil prices has forced all Oil & Gas companies to delay their projects which has had a direct impact on us. However, your Company has endeavoured to keep costs under control and this is reflected in its performance.

Net revenues from operations of the company were Rs 4409 million for the year 2014-15 as against Rs 5099 million for the previous year. Consequently, PBT declined to Rs 284 million from Rs 615 million.

DIVIDEND

The Board of Directors have recommended a dividend of Rs 5/- (50%) per equity share for the year ended 31 March, 2015. In the last year a dividend of Rs 10/- (100%) per equity share was paid.

FIXED DEPOSIT

The Company has stopped accepting fixed deposits since 2001-02. As such as of 31 March, 2015 there are no fixed deposits outstanding.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

No Loans, Guarantees covered under the provisions of Section 186 of the Companies Act, 2013 are given / provided during the reporting year.

During the year under review, your Company has made an investment of Rs 44.7 million in Kirloskar RoadRailer Limited, Wholly Owned Subsidiary Company by subscribing to its rights issue of 14.9 million equity shares of Rs. 10/- each partly paid-up of Rs 3/- per equity share.

Your Company has offered 0.1 million equity shares of Rs 10/- each at Rs 500/- per equity share in response to the Buyback offer made by Kirloskar Chillers Private Limited, Associate Company. As a result of this buyback, your Company now holds 0.39 million equity shares representing 34.21% in Kirloskar Chillers Private Limited.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

COMMENTS ON AUDITORS' REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s P G Bhagwat & Co, Statutory Auditors except a matter of emphasis in respect of approval of Central Government to payment of minimum remuneration to Executive Chairman in their Audit Report. Application, as required is being filed.

There are no qualifications, reservations or adverse remarks in the Secretarial Audit Report of M/s SVD & Associates, Partnership firm of Company Secretaries.

ENERGY CONSERVATION

Your Company is working to reduce the energy required and is continually improving operations to become more energy efficient. Every year your Company adopts best available technology and enhances energy efficiency of its operations. Your Company also works on minimizing waste generated and adopting 5R (Reduce, Reuse, Recycle, Refuse & Recover) practices to reduce the impact on environment. To create awareness amongst employees and society, your Company celebrates Energy Conservation Week, Environment day and Ozone day.

AWARDS

During the year under review, your Company has received:

- 2nd prize at 9th State Level EC Award for financial year 2012-13 from MEDA (Maharashtra Energy Development Agency).

- The Company has also received the following awards in the 28th National Convention on Quality Concepts - NCQC 2014 organised by QCFI:

- "Par Excellence Award Trophy" - 2 Nos.

- "Excellence Award Trophy" - 5 Nos.

- "Distinguished Award Trophy" - 1 No.

- "Meritorious Award Trophy" - 2 Nos.

- CII- EXIM Bank Award for "Significant Achievement on the Journey towards Business Excellence - 2014" DIRECTORS

Mr A C Mukherji, Mr P S Jawadekar, Mr G Krishna Rao, Mr Sunil Shah Singh and Late Mr J Y Tekawade were appointed as Independent Directors on the Board in the last Annual General Meeting held on 23 July, 2014.

The Board of Directors have co-opted Dr Aditi Pant as an Additional Director on the Board with effect from 24 July, 2014. She ceases to be a Director at the ensuing Annual General Meeting and being eligible offers herself for appointment as an Independent Director for a period 3 years. Details of the proposal for appointment of Dr Aditi Pant are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 40th Annual General Meeting.

The Company has received notice in writing proposing her candidature for the office of Director. The necessary resolution for her appointment is being placed before you.

Your Company has received necessary declarations from all its Independent Directors stating that they meet the criteria of independence as provided in Sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Accordingly, Mr Atul C Kirloskar, Non-Executive Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

We deeply regret to inform that Mr J Y Tekawade, Independent Director of the Company, passed away on 4 November, 2014 at the age of 80. He was associated with your Company over a decade. His guidance in every aspect has helped the Company to a great extent. The Company remembered his pragmatic approach in tackling any given situation and his enormous contribution to the Board. Your Company places on record its profound grief and sense of sorrow on the sad demise of Mr J Y Tekawade.

Board Evaluation

The annual evaluation framework for assessing the performance of Directors comprises of the following key areas:

a) Attendance for the meetings, participation and independence during the meetings;

b) Interaction with Management;

c) Knowledge and proficiency;

d) Strategic perspectives or inputs

The evaluation involves assessment by the Nomination and Remuneration Committee and Board of Directors. A member of the Nomination and Remuneration Committee and Board does not participate in the discussion of his / her evaluation.

Directors Appointment and Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee framed a 'Remuneration Policy' for selection and appointment of Directors and for their remuneration. The Remuneration Policy is annexed as "Annexure 1".

Number of Meetings of the Board

A calendar of meetings is prepared and circulated in advance to the Directors. During the year six Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanation obtained by them, the Directors in terms of clause (c) of Sub-section (3) of Section 134 state that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there have been no material departures;

(b) Accounting policies as mentioned in note 50 to the financial statements have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March, 2015 and of the profit of the company for the year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for prevention and detection of fraud and other irregularities;

(d) The annual accounts have been prepared on a going concern basis;

(e) Proper internal financial controls have been laid down for the company and that such internal financial controls are adequate and are operating effectively; and

(f) Proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

AUDITORS

a. Statutory Auditors

The Auditors of the Company, M/s P G Bhagwat, Firm Registration No. 101118W, Chartered Accountants, were appointed for a period of two years in the last Annual General Meeting subject to ratification at the ensuing Annual General Meeting. The requisite certificate pursuant to Section 139 (1) of the Companies Act, 2013 has been received by the Company from M/s P G Bhagwat, Chartered Accountants. Resolution seeking Members ratification for the appointment of M/s P G Bhagwat, Chartered Accountants, is included at Item No. 4 of the Notice convening the Annual General Meeting.

b. Cost Auditors

The Board of Directors had, on the recommendation of the Audit Committee, appointed M/s S G Jog, a proprietary firm of Cost Accountant to audit the cost accounts of the Company for the financial year 2014-15 on a remuneration of Rs 5 Lacs. However pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit will be applicable to the Company for the financial year commencing on or after 1 April, 2015.

As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Members' ratification for the remuneration payable to M/s S G Jog, a proprietary firm of Cost Accountant for the year ended on 31 March, 2016 is included at Item No. 5 of the Notice convening the Annual General Meeting.

c. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments and modifications thereof, the Company has appointed M/s SVD & Associates, a partnership firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure 2".

CORPORATE GOVERNANCE

The Company endeavors to maximize the wealth of the shareholders by managing the affairs of the Company with a pre-eminent level of accountability, transparency and integrity. A report on Corporate Governance including the relevant Auditors' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with BSE Limited alongwith Management Discussion and Analysis is annexed and forms part of the Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under Sub-section (3) of Section 92 of the Companies Act, 2013 is annexed as "Annexure 3".

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions which were entered into during the financial year were on an arm's length basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The statement that the transactions are at arm's length and in the ordinary course of business is supported by a Certificate from the Managing Director. The Company has also obtained the certificate from a Chartered Accountant on periodical basis.

All Related Party Transactions are placed before the Audit Committee for their approval and to the Board, as and when required. In certain cases prior omnibus approval of the Audit Committee is obtained on a yearly basis. The transactions entered into pursuant to the omnibus approval so granted are reviewed by the Audit Committee on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. The scope of the Internal Audit is decided by the Audit Committee and the Board. To maintain its objectivity and independence, the Board has appointed an external Auditor, which reports to the Audit Committee of the Board on a periodic basis.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies for various functions of the Company. Based on the report of Internal Auditor, process owners undertake corrective action wherever required in their respective areas and thereby strengthen the controls further. Audit observations and actions taken thereof are presented to the Audit Committee of the Board.

RISK MANAGEMENT

The Company has a Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The risk framework defines the risk management approach across the enterprise at various levels. To strengthen the risk management framework, company has formed segment level risk committees to identify, analyze and mitigate the potential risks.

SUBSIDIARY COMPANY

As on 31 March, 2015, the Company had one wholly owned subsidiary and an associate company. There has been no change in the number of subsidiary and associate company or in the nature of their business, during the year under review.

Kirloskar RoadRailer Limited is a wholly owned subsidiary of the Company. The subsidiary company is set up for providing RoadRailer services. Your Company expects that the RoadRailer services will commence from the current financial year.

Kirloskar Chillers Private Limited is an associate company. The Company is engaged in manufacture of an entire range of chillers i.e. Centrifugal Screw and Reciprocating and its Spares and After Sales Service. During the year under review the net revenue of Kirloskar Chillers Private Limited is Rs 760 million and profit after tax is Rs 49.9 million. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the company which includes its subsidiary and associate company and forms part of the Annual Report. A

statement containing salient features of the subsidiary and associate company is also included in the Annual Report.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and consolidated financial statements has been placed on the website of the Company namely www.kirloskarkpcl.com.

CORPORATE SOCIAL INITIATIVES

As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Promoting Education, Health and Sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013.

Sanitation, being a national agenda, your Company has taken initiative to create awareness about WaSH (Water, Sanitation and Hygiene) among the school children from nearby schools by promoting employee volunteering and training these volunteers to implement various WaSH modules throughout the academic year.

Your Company has provided preventive health care to 15000 school children from nearby 12 schools (8 schools in the vicinity of Hadapsar Plant and 4 schools in the vicinity of Saswad Plant) by offering them annual health check up.

To create awareness about HIV AIDS in the general community (approximately reaching out to about 3000 people) by way of campaigns conducted by trained GET (Graduate Engineer Trainee) volunteers. HIV Positive Boot Camp was conducted to induct and train 15 GET volunteers and in turn HIV AIDS awareness campaigns were conducted for the general community on 1st December, 2014 (World AIDS Day), during GAWA (Global AIDS Week Action) and in the whole month that followed.

Your Company has contributed an amount of Rs 15 million by way of donation to the Corpus Fund of KIAMS for creating infrastructure facilities for imparting education.

CSR Policy in brief:

The focus of CSR activities will be on Education, Environment and Health.

While devising projects, care should be taken to promote the education, health and sanitation, protect the environment and minimize adverse impact if any on the society at large.

The Company is committed to uphold the interests of all the stakeholders by implementing the various guidelines like business excellence models.

The Company shall spend at least 2% (two percent) of the average net profits, calculated in accordance with the provisions of the Companies Act, 2013, and Rules thereunder, made by it in three immediately preceding financial years, in every financial year.

Any income or surplus arising out of CSR activities undertaken by the Company will form part of the corpus earmarked for CSR activities.

Any surplus arising out of any of the CSR activities carried out by the Company will not be treated as part of the business profits of the Company.

The Annual Report on CSR activities is annexed herewith as "Annexure 4".

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure 5".

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report.

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the names and other particulars of employees are set out in the "Annexure 6" to the Directors' Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14 of the Rules issued thereunder, the Internal Committee constituted under the said Act has confirmed that no complaint / case has been filed / pending with the Company during the year.

EMPLOYEES

Your Company has taken several initiatives for Human Resource development and retention. Competency mapping, identifying training needs, career counseling and Management Development Programs are some of the initiatives adopted by your Company. Training programs are designed to enhance skills, knowledge and behaviour. Employees are motivated through empowerment and rewards for good performance. Adoption of 5S across the Company has led to a clean and healthy environment. All these measures have resulted in increased employee engagement.

Your Company has 876 permanent employees on its roll as on 31 March, 2015.

ACKNOWLEDGEMENT

The Directors wish to convey their appreciation to all your Company's employees for their enormous personal efforts as well as their collective contribution to your Company's performance. The Directors would also like to thank the shareholders, customers, dealers, suppliers, bankers and all the other stakeholders for their continued support and their confidence in its management.

For and on behalf of the Board of Directors sd/-

Place : Pune Rahul C Kirloskar Date : 7 May, 2015 Executive Chairman DIN 00007319


Mar 31, 2014

TO THE MEMBERS

The Directors have pleasure in presenting their Report along with the Audited Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

The Financial results for the year ended March 31, 2014 are summarised below:

(Figures in Rs)

2013-14 2012-13

Gross Profit 746,791,697 822,662,567

Less:

Depreciation 132,140,425 114,903,957

Provision for Taxation 226,350,955 236,782,304

Profit after tax 388,300,317 470,976,306

Surplus from previous year 207,781,268 217,131,761

Add / (Less)

Transferred to General Reserve 250,000,000 300,000,000

Proposed Dividend 128,443,380 154,132,056

Tax on Proposed Dividend 21,828,952 26,194,743

Retained Earnings 195,809,253 207,781,268

OPERATIONS

The Indian economic growth rate has slowed down for the past couple of years and recovery is still some time away. The complex world of global economics and its volatility have affected India''s growth also.

The manufacturing sector has been the worst affected and the capital goods market has been hit the hardest. High fiscal deficit, high inflation, a volatile currency and the political environment have all contributed to uncertainty in the economy which in turn has caused the Company''s revenue to drop for the year 2013-14.

The net revenue of your company for the year ended under review was Rs. 5,099 Million against Rs. 5,488 Million of last year. The revenue of the compression segment was Rs. 4,159 Million as against Rs. 4,484 Million in 2012-13.

The compression segment was affected mainly due to very low investments in the Oil and Gas sector. Capital expenditure for expansion/up-gradation of refineries was also very low and this affected our business of Refrigeration and Gas Compression Systems. The CNG business was affected due to various infrastructural and gas availability issues. Our thrust into the export business has resulted in your Company booking the first export order for a CNG system.

The revenue of the Transmission segment was Rs. 679 Million as against Rs. 1,005 Million in 2012-13. The Transmission segment was affected mainly due to stagnation of growth and high stock levels in the Indian Railways. The wind turbine market also went down substantially due to lack of clarity in Government policies.

During the year under review, your company has successfully completed the Emergency Brake Distance Test (EBD) of one Road Railer Rake which is a pre-requisite for the running of this train. Your Company is now awaiting the final certification from the concerned Railway authorities.

Cost reduction measures and the WoW (war on waste) initiative helped your company to generally maintain its profitability for the year under review despite a severe downturn in the economy.

ENERGY CONSERVATION

Within the Company there are continuous efforts to improve operational efficiencies and minimizing consumption of natural resources. Your Company actively makes efforts to increase awareness about the need to sustain the environment and constantly evaluates new initiatives that could reduce waste and emissions within the Company.

As a result of this even though there is a substantial rise in power tariff and oil prices, we have been able to contain our costs.

DIVIDEND

The Board of Directors have recommended a dividend of Rs. 10/- (100 %) per equity share for the year ended March 31, 2014. In the last year a dividend of Rs.12/- (120%) per equity share was paid.

FIXED DEPOSIT

As of March 31, 2014 there are no Fixed Deposits outstanding nor unclaimed.

PROSPECTS

Your Company believes that the economic potential of the country may remain subdued for this year too. With the new Government in place it is hoped that the year 2015-16 will see a boost in investments in sectors that your Company is involved in. The uncertain political climate has led to many projects in the Oil and Gas sector being postponed or dropped. This has impacted the revenue of the Compression segment in 2013-14. It is expected that some of these projects in the Oil and Gas sector will be cleared for implementation in 2014-15 which will help your Companies'' revenue from 2015-16 onwards. Our drive for exports of hydro carbon based refrigeration systems and gas compression systems has resulted in your Company receiving some export orders and we expect to take this initiative forward in this year too.

With the Government of India reintroducing generation based incentive and launching of a new initiative to double the production of renewable energy by 2017, (upto 55000 MW) opportunities in the Transmission division should grow in the year 2015-16.

After receipt of the EBD certificate from the Railway Authorities and after setting up the terminals near Delhi and Chennai, your Company has a plan to manufacture and sell one more Road Railer Rake this year.

DIRECTORS

Mr. Sanjay C. Kirloskar resigned from the Board of the Company as on April 23, 2014. Your Directors expressed deep sense of gratitude and wishes to place on record their appreciation of the valuable contribution made by him during his tenure.

As per provisions of the Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Mr. A. C. Mukherji, Mr. P. S. Jawadekar, Mr. G. Krishna Rao, Mr. Sunil Shah Singh and Mr. J. Y. Tekawade as Independent Directors in the ensuing Annual General Meeting. Details of the proposal for appointment of Mr. A. C. Mukherji, Mr. P. S. Jawadekar, Mr. G. Krishna Rao, Mr. Sunil Shah Singh and Mr. J. Y. Tekawade are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 39th Annual General Meeting. The Company has received notice(s) in writing proposing them as candidature for the office of Director. The necessary resolutions for their appointment are being placed before you.

Accordingly, Mr. D. R. Swar retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

CORPORATE GOVERNANCE

Your Company conforms to the norms of Corporate Governance as envisaged in the Listing Agreement with the Bombay Stock Exchange Ltd. A separate report on Corporate Governance, along with Statutory Auditors'' Certificate on the Compliance, Management Discussions and Analysis, is attached and forms part of the Annual Report.

STATUTORY DISCLOSURES

1. Conservation of Energy, Technology Absorption and Foreign Exchange

The information required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, pertaining to Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo, is given in the Annexure I to this Report and forms part of this Report.

2. Particulars of Employees

Information in accordance with sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, is given in the Annexure to the Directors'' Report. However as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to the Members of your Company excluding the aforesaid information. Any Member interested in obtaining the said annexure may write to the Secretarial Department at the Registered Office of the Company.

3. Consolidated Financial Statements

Pursuant to Clause 32 and 50 of the Listing Agreement with Stock Exchanges, your Company has prepared Consolidated Financial Statements as per the Accounting Standards applicable to the Consolidated Financial Statements issued by The Institute of Chartered Accountants of India. Audited Consolidated Financial Statements along with the Auditors'' report is presented elsewhere in this annual report.

4. Subsidiary Company

Kirloskar RoadRailer Limited is a Subsidiary of the Company. The Subsidiary Company is set up for providing RoadRailer Services. Your Company expects that the RoadRailer services will commence from the current financial year.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of Kirloskar RoadRailer Limited are not being attached with the Balance Sheet of the Company. However the financial information of Kirloskar RoadRailer Limited is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of Kirloskar RoadRailer Limited and the related detailed information to any member of the Company who may be interested in obtaining the same.

5. Directors'' Responsibility Statement

The Directors confirm that :

i. In preparation of Annual Accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently in order to show true and fair view of the state of affairs.

iii. The Directors have taken proper care in maintaining accounting records as per the provisions of the Companies Act, 1956, for safeguarding your Company''s Fixed Assets for preventing and detecting fraud and other irregularities.

iv. The Annual Accounts are prepared on the principle of going concern.

6. Cash Flow

A Cash Flow statement for the year ended March 31, 2014 is attached to the Balance Sheet.

7. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14 of the Rules issued there under, the Internal Committee constituted under the said Act has confirmed that no complaint / case has been filed / pending with the Company during the year.

AUDITORS

The Auditors of the Company, M/s. P. G. Bhagwat, Firm Registration No. 101118W, Chartered Accountants, Pune, retire at the conclusion of ensuing Annual General Meeting. As per the Section 139 and other applicable provisions of the Companies Act, 2013 and the rules issued there under, M/s. P. G. Bhagwat, Firm Registration No. 101118W are eligible for re-appointment for a term of 2 (two) years subject to ratification by the Members at every Annual General Meeting. The requisite certificate pursuant to Section 139 (1) of the Companies Act, 2013 has been received by the Company.

EMPLOYEES

Your Company has adopted modern techniques for Human Resource development and retention. Competency mapping, identifying training needs, career counselling are some of the methods adopted by your Company. Training programs are designed to enhance skills and knowledge. Employees are motivated with empowerment and rewards for good performance. Adoption of 5S across the Company has led to a clean and healthy environment. All these measures have resulted in Industry best attrition rate. Your Company has 970 permanent employees on its roll as on March 31, 2014.

ACKNOWLEDGMENT

The Directors wish to convey their appreciation to all your Company''s employees for their enormous personal efforts as well as their collective contribution to your Company''s performance. The Directors would also like to thank the shareholders, customers, dealers, suppliers, bankers and all the other stakeholders for their continued support and their confidence in its management.

For and on behalf of the Board of Directors

Place : Pune RAHUL C. KIRLOSKAR

Date : May 27, 2014 Executive Chairman


Mar 31, 2013

The Directors have pleasure in presenting their Report along with the Audited Accounts for the year ended March 31,2013.

FINANCIAL RESULTS

The Financial results for the year ended March 31,2013 are summarised below:

(Figures in Rs.)

2012-13 2011-12

Gross Profit 822,662,567 1,005,288,670

Less: Depreciation 114,903,957 120,572,158

Provision for Taxation 236,782,304 265,571,187

Profit after tax 470,976,306 619,145,325

Surplus from previous year 217,131,761 177,122,565

Add/(Less)

Transferred to General Reserve 300,000,000 400,000,000

Proposed Dividend 154,132,056 154,132,056

Tax on Proposed Dividend 26,194,743 25,004,073

Retained Earnings 207,781,268 217,131,761

OPERATIONS

Uncertainty in the Indian economy contributed to a drop in your Company''s revenues in the year 2012-13. The market sentiment was affected due to rise in the foreign exchange rate, inflation and high interest rates. The rise in crude oil prices also contributed to this uncertainty in India.

The net revenue of your Company for the year ended review was 5,488 million against Rs.6,666 million of last year.

The revenue of the Compression Segment was Rs. 4,484 million as against Rs.5,781 million in 2011 -12.

The Compression Segment was affected mainly due to very low investments in the Oil and Gas Sector.

Capital expenditure for expansion/up-gradation of refineries was also very low and this affected our business of Refrigeration and Gas Compression Systems.

The CNG segment did not grow as anticipated due to various infrastructural and gas availability issues.

Revenue of the Transmission segment was Rs. 1,005 million as against Rs. 885 million of the last year.

Inspite of the manufacturing sector not growing in the last year, your Company has generally maintained its profitability in the year.

This was the result of the many cost reduction measures undertaken by your company. This included value engineering products, re-engineering of our processes, improving efficiencies and reducing throughput time.

Your Company launched a WoW (War on Waste) initiative last year and employees consciously contributed to eliminating/ reducing all kinds of waste.

ENERGY CONSERVATION

In spite of substantial rise in power tariff and Oil prices, we have been able to contain our costs due to various energy conservation projects that we undertook last year.

Our efforts in energy conservation were recognised by the Institute of Engineers Pune, Local Centre, who awarded us with DSK Energy Award for Outstanding Contribution in Energy Sector.

DIVIDEND

The Board of Directors have recommended a dividend of Rs. 12/- (120%) per equity share for the year ended March 31,2013. In the last year a similar dividend of Rs.12/- (120%) per equity share was paid.

FIXED DEPOSIT

As of March 31,2013 there are no Fixed Deposits outstanding nor unclaimed.

PROSPECTS

The manufacturing sector witnessed a decline in the last couple of years. There are indications that the business sentiment is improving and your Company is meticulously keeping track of the developments. While this will definitely help in order booking, it will help in your company''s revenues from 2014-15 onwards.

Revenues of the Transmission products have grown by 20% over the last year with a marked improvement in profitability. We expect this Division to maintain its focus on profitability this year too.

Your company has taken up exports of Hydrocarbon Refrigeration and Compression Systems as a key growth area and in this context, I am glad to inform you that your company has now been approved by many Oil & Gas Companies in the Middle-East and South-East Asia as a supplier of these systems. These will help in growing revenues in the coming years.

Our efforts to get ourselves approved in many more Oil & Gas Companies in these regions will continue in this year too and you should be able to see your Company expanding this products in the coming years.

During the year end review, your company has manufactured one RoadRailer Rake which has been inspected and cleared by RDSO and is now awaiting Emergency Brake Distance Test (EBD).

DIRECTORS

Mr. J. Y. Tekawade, Mr. P. S. Jawadekar, Mr. Rahul C. Kirloskar and Mr. Vikram S. Kirloskar retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

CORPORATE GOVERNANCE

Your Company conforms to the norms of Corporate Governance as envisaged in the Listing Agreement with the Bombay Stock Exchange Ltd. A separate report on Corporate Governance, along with Statutory Auditors'' Certificate on the Compliance, Management Discussions and Analysis, is attached and forms part of the Annual Report.

STATUTORY DISCLOSURES

1. Conservation of Energy, Technology Absorption and Foreign Exchange

The information required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, pertaining to Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo, is given in the Annexure I to this Report and forms part of this Report.

2. Particulars of Employees

Information in accordance with sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, is given in the Annexure to the Directors'' Report. However as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to the Members of your Company excluding the aforesaid information. Any Member interested in obtaining the said annexure may write to the Secretarial Department at the Registered Office of the Company.

3. Consolidated Financial Statements

Pursuant to Clause 32 and 50 of the Listing Agreement with Stock Exchanges, your Company has prepared Consolidated Financial Statements as per the Accounting Standards applicable to the Consolidated Financial Statements issued by The Institute of Chartered Accountants of India. Audited Consolidated Financial Statements along with the Auditors'' report is presented elsewhere in this annual report.

4. Subsidiary Company

Kirloskar RoadRailer Limited is Subsidiary of the Company.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of Kirloskar RoadRailer Limited are not being attached with the Balance Sheet of the Company. However the financial information of Kirloskar RoadRailer Limited is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of Kirloskar RoadRailer Limited and the related detailed information to any member of the Company who may be interested in obtaining the same.

5. Directors'' Responsibility Statement

The Directors confirm that :

i. In preparation of Annual Accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently in order to show true and fair view of the state of affairs.

iii. The Directors have taken proper care in maintaining accounting records as per the provisions of the Companies Act, 1956, for safeguarding your Company''s Fixed Assets for preventing and detecting fraud and other irregularities.

iv. The Annual Accounts are prepared on the principle of going concern.

6. Cash Flow

ACash Flow statement for the year ended March 31,2013 is attached to the Balance Sheet.

AUDITORS

The Auditors of the Company, M/s. R G. Bhagwat, Firm Registration No. 101118W, Chartered Accountants, Pune, retire at the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The requisite certificate pursuant to Section 224(1 -B) of the Companies Act, 1956 has been received.

EMPLOYEES

Your Company follows unique methods towards human resource retention and development. The human skills development part is taken care through competency mapping and identifying training needs. Training programs are designed in such a way that it addresses knowledge and skill enhancement. Empowerment and rewarding good performances ensures motivation and healthy working environment.

Employee relations achieved an important milestone with smooth wage settlement agreement with Workers Union on December 25, 2012 for a period of 36 months with effect from January 1, 2013. Industrial relations continued to be cordial during the year.

Your Company has 1017 permanent employees on its roll as on March 31,2013.

ACKNOWLEDGMENT

The Directors wish to convey their appreciation to all your Company''s employees for their enormous personal efforts as well as their collective contribution to your Company''s performance. The Directors would also like to thank the shareholders, customers, dealers, suppliers, bankers and all the other stakeholders for their continued support and their confidence in its management.

Forand on behalf of the Board of Directors

Place: Pune RAHULC. KIRLOSKAR

Date: April 24,2013 Executive Chairman


Mar 31, 2012

The Directors have pleasure in presenting their Report along with the Audited Accounts for the year ended March 31,2012.

FINANCIAL RESULTS

The Financial results for the year ended March 31,2012 are summarised below:

(Figures in Rs.) 2011-12 2010-11

Gross Profit 1,005,288,670 771,741,899

Less:

Depreciation & Amortization Expenses 120,572,158 117,511,931

Provision for Taxation 265,571,187 215,102,416

Profit after tax 619,145,325 439,127,552

Surplus from previous year 177,122,565 167,131,142

Add/(Less)

Transferred to General Reserve 400,000,000 250,000,000

Proposed Dividend 154,132,056 154,132,056

Tax on Proposed Dividend 25,004,073 25,004,073

Retained Earnings 217,131,761 177,122,565

OPERATIONS

A net sale of Rs.6,666 Millions was achieved during the year as against Rs. 4,917 million in last year. This 36% increase in revenue growth over the previous year has also contributed to a Profit Before Tax growth of Rs. 231 Millions.

The revenue of Compression Segment grew by Rs. 1,428 Millions to Rs. 5,781 Millions and growth in all product segments and dominance in all are as continued.

As committed to you last year the revamp of Transmission Division Operations has resulted in a great increase from Rs. 565 Millions to Rs. 885 Millions and has become operationally profitable.

We successfully delivered our largest Centrifugal Compressor based Refrigeration System for the first Coal Gasification Plant in India.

Export grew from Rs. 129 Millions to Rs. 319 Millions over the previous year.

ENERGY CONSERVATION

We have received National level award for Excellence in Energy Management from CM on December 1,2011.

We have also received a State level award for Excellence in Energy Conservation and Management from Maharashtra Energy Development Agency on March 13,2012 forthe year 2008-09.

DIVIDEND

The Board of Directors have recommended a dividend of Rs. 121- (120%) per equity share for the year ended March 31,2012 as against Rs. 121- (120%) per equity share paid last year.

FIXED DEPOSIT

As on March 31,2012 there are no fixed deposits either outstanding or unclaimed.

PROSPECTS

The year 2011-12 tested the resilience of our business segment in the face of high interest rates and moderate demand slowdown. Despite challenges our revenues increased to 36 % from 9% (i.e. from Rs.4,917 million in 2010- 11 to Rs. 6,666 million in 2011 -12).

The optimism we had on the growth of the Indian Economy was tempered by the 2nd Quarter of the year. The Wind Mill market shrunk due to various factors.

Investment in the Oil and Gas, Power and other infrastructure projects slowed down significantly.

For the Current Financial year 2012-13, your Company has a cautious outlook on the economy considering recession in global economy the anticipated rise in Foreign Exchange rates, crude oil prices, inflationary pressures in the Indian economy and high interest rates.

Consequently, your Company is carrying a lower order board as compared to the previous year. However, the silver lining is that we have an unprecedentedly large enquiry level.

DIRECTORS

Mr. Sanjay C. Kirloskar, Mr. D. R. Swar and Mr. G. Krishna Rao retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Board of Directors at their meeting held on January 23, 2012 appointed Mr. Atul C. Kirloskar as an Additional Director of the Company. Pursuant to Section 260 of the Companies Act, 1956, Mr. Atul C. Kirloskar ceases to be a Director at the ensuing Annual General Meeting. The Company has received notice in writing proposing his candidature for the office of Director. The necessary resolutions for their appointment are being placed before you.

The Board of Directors at their meeting held on January 23, 2012 appointed Mr. Rahul C. Kirloskar, Chairman as a Whole-Time Director and designated him as an Executive Chairman for a period of 5 years.

CORPORATE GOVERNANCE

Your Company conforms to the norms of Corporate Governance as envisaged in the Listing Agreement with the Bombay Stock Exchange Ltd. A separate report on Corporate Governance, along with Statutory Auditors' Certificate on the Compliance, Management Discussions and Analysis, is attached and forms part of the Annual Report.

STATUTORY DISCLOSURES

1. Conservation of Energy, Technology Absorption and Foreign Exchange

The information required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, pertaining to Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo, is given in the Annexure I to this Report and forms part of this Report.

2. Particulars of Employees

Information in accordance with sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, is given in the Annexure to the Directors' Report. However as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to the Members of your Company excluding the aforesaid information. Any Member interested in obtaining the said annexure may write to the Secretarial Department at the Registered Office of the Company.

3. Subsidiary Company

During the year Kirloskar RoadRailer Limited has became Subsidiary of the Company. The activity of manufacturing facility of Road Railer are set up at Nashik and the actual production will be commencing from the current financial year.

In accordance with the general circular No. 2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of Kirloskar Road Railer Limited are not being attached with the Balance Sheet of the Company. However the financial information of Kirloskar Road Railer Limited is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of Kirloskar Road Railer Limited and the related detailed information to any member of the Company who may be interested in obtaining the same.

The consolidated financial statement prepared as per applicable provisions and duly audited by the statutory auditors, is presented elsewhere in this annual report.

4. Directors' Responsibility Statement

The Directors confirm that:

i. In preparation of Annual Accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently in order to show true and fair view of the state of affairs.

iii. The Directors have taken proper care in maintaining accounting records as per the provisions of the Companies Act, 1956, for safeguarding your Company's Fixed Assets for preventing and detecting fraud and other irregularities.

iv. The Annual Accounts are prepared oh the principle of going concern.

5. Cash Flow

A Cash Flow statement for the year ended March 31,2012 is attached to the Balance Sheet.

AUDITORS

The Auditors of the Company, M/s. P. G. Bhagwat, Firm Registration No. 101118W, Chartered Accountants, Pune, retire at the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The requisite certificate pursuant to Section 224(1-B) of the Companies Act, 1956 has been received.

EMPLOYEES

Your Company follows unique methods towards human resource retention and development. The human skills development part is taken care of through competency mapping and identifying training needs. Training programs are designed in such a way that it addresses knowledge and skill enhancement. Empowerment and rewarding good performances ensures motivation and healthy working environment.

Industrial relations continued to be cordial during the year. Your Company has 1013 permanent employees on its roll as on March 31,2012.

ACKNOWLEDGMENT

The Directors wish to convey their appreciation to all your Company's employees for their enormous personal efforts as well as their collective contribution to your Company's performance. The Directors would also like to thank the employees, shareholders, customers, dealers, suppliers, bankers and all the other stakeholders for their continuous support and their confidence in its management.



For and on behalf of the Board of Directors

Place: Pune RAHUL C. KIRLOSKAR

Date: April 24,2012 Chairman


Mar 31, 2011

The Directors have pleasure in presenting their Report along with the Audited Accounts for the year ended March 31, 2011.

FINANCIAL RESULTS

The Financial results for the year ended March 31,2011 are summarised below:

(Figures in Rs.)

2010-11 2009-10

Gross Profit 764,290,093 755,788,674

Less:

Depreciation 113,345,266 73,507,753

Provision for Taxation 215,902,416 206,572,078

Profit after tax 435,042,411 475,708,843 Balance of Profit from previous year 167,131,142 168,404,348

Add/(Less)

Tax adjustments for earlier years 4,085,141 3,403,713

Expenses in respect of Previous Year - (66,670)

Transferred to General Reserve 250,000,000 300,000,000

Proposed Dividend 154,132,056 154,132,056

Tax on Proposed Dividend 25,004,073 26,187,036

Surplus carried to Balance Sheet 177,122,565 167,131,142

OPERATIONS

During the year under review the net revenue of your company was Rs. 4,917 million as against Rs. 4,533 million last year showing a growth of 9%.

The revenue of the Transmission Division dropped from Rs. 629 million to Rs. 565 million Your Company has taken appropriate action to revamp the Transmission Division and this is expected to be in place in the coming year.

In the year under review your Company laid emphasis on improving operating efficiency, cost containment and working capital management. These have resulted in improvement in the performance of the company and the Company was not required to avail any working capital funds through out the year.

ENERGY CONSERVATION

"The Institution of Engineers" awarded your company the First Prize for "Outstanding Contribution in Energy Sector". This is a state level award.

Your Company also bagged the "Best Innovative Project for 1 MW Wind Turbine Gear Box Testing".

DIVIDEND

The Board of Directors have recommended a dividend of Rs. 12/- (120%) per equity share for the year ended March 31,2011 as against Rs. 12/- (120%) per equity share paid last year.

FIXED DEPOSIT

As on March 31,2011 there are no fixed deposits either outstanding or unclaimed.

PROSPECTS

The Indian economy has maintained its high growth rate. This is expected to continue during the current year also.

In the traditional fields your Company operates in i.e. Air, Refrigeration & Transmission, growth will be in line with the economic growth of the Country. Consequently a sustainable growth is envisaged during the coming years in these segments.

Investment in the Oil & Gas Sector has helped your company grow. The company has made inroads into new areas in this field.

Your Company was contracted to supply API 617 based refrigeration system for the first ever coal gasification plant being set up in India and this plant will be commissioned during the coming year.

The revamp of the Transmission Division which the Company undertook last year under review has resulted in the company focusing on Railways, Marine and Wind Power. This is expected to show significant improvement in the performance of the Division during the coming financial year.

Your Company has entered into an agreement with Indian Railway on March 16, 2011 for haulage of Road Railer trains, including its pilot project between Delhi & Chennai. Your Company is expecting to commission its plant for manufacture of these Road Railers during the current year.

The Road Railer is a biomodal transport system which will carry white goods from one destination to other by road as well as rail using the same vehicle. For this purpose your Company has already obtained & developed necessary technology.

DIRECTORS

Mr. Rahul C. Kirloskar, Mr. Vikram S. Kirloskar & Mr. A. C. Mukherji retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Board of Directors at their meeting held on January 19, 2011 appointed Mr. Sunil Shah Singh as an Additional Director of the Company. Pursuant to Section 260 of the Companies Act, 1956, Mr. Sunil Shah Singh ceases to be a Director at the ensuing Annual General Meeting. The Company has received notice in writing proposing his candidature for the office of Director. The necessary resolutions for their appointment are being placed before you.



CORPORATE GOVERNANCE

Your Company conforms to the norms of Corporate Governance as envisaged in the Listing Agreement with the Bombay Stock Exchange Ltd. A separate report on Corporate Governance, along with Statutory Auditors Certificate on the Compliance, Management Discussions and Analysis, is attached and forms part of the Annual Report.

STATUTORY DISCLOSURES

1. Conservation of Energy, Technology Absorption and Foreign Exchange

The information required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, pertaining to Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo, is given in the Annexure I to this Report and forms part of this Report.

2. Particulars of Employees

There were no employees of the category indicated under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended.

3. Directors Responsibility Statement

The Directors confirm that:

i. In preparation of Annual Accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently in order to show true and fair view of the state of affairs.

iii. The Directors have taken proper care in maintaining accounting records as per the provisions of the Companies Act, 1956, for safeguarding your Companys Fixed Assets for preventing and detecting fraud and other irregularities.

iv. The Annual Accounts are prepared on the principle of going concern.

4. Cash Flow

A Cash Flow statement for the year ended March 31,2011 is attached to the Balance Sheet.

AUDITORS

The Company had received a Special Notice from a Member of the Company signifying its intention to propose the name of M/s. P. G. Bhagwat, Chartered Accountants, Pune, Firm Registration Number 101118W, as Statutory Auditors of the Company instead of M/s. Dalai & Shah, Chartered Accountants, Mumbai who are retiring at the ensuing Annual General Meeting.

Accordingly, the Board of Directors of the Company, pursuant to the recommendation of the Audit Committee, proposes the appointment of M/s. P. G. Bhagwat, Chartered Accountants, Pune as the Statutory Auditors of the Company.

M/s. P. G. Bhagwat has furnished a Certificate under Section 224(1B) of the Companies Act, 1956 that their proposed appointment, if made, will be in accordance with the said provision of the Companies Act, 1956. The Members of the Company may appoint the Statutory Auditors as per Annual General Meeting Notice attached separately.

EMPLOYEES

Your Company follows unique methods towards human resource retention and development. The human skills development part is taken care of through competency mapping and identifying training needs. Training programs are designed in such a way that it addresses knowledge and skill enhancement. Empowerment and rewarding good performances ensures motivation and healthy working environment.

Industrial relations continued to be cordial during the year. Your Company has 985 permanent employees on its roll as on March 31,2011.

ACKNOWLEDGEMENT

The Directors wish to convey their appreciation to all your Companys employees for their enormous personal efforts as well as their collective contribution to your Companys performance. The Directors would also like to thank the employees, shareholders, customers, dealers, suppliers, bankers and all the other stakeholders for their continuous support and their confidence in its management.

For and on behalf of the Board of Directors

RAHUL C. KIRLOSKAR Chairman

Place: Pune Date : May 17,2011


Mar 31, 2010

The Directors have pleasure in presenting their Report along with the Audited Accounts for the year ended March 31,2010.

FINANCIAL RESULTS

The Financial results for the year ended March 31, 2010 are summarised below:

(Figures in Rs.)

2009-10 2008-09

Gross Profit 755,788,674 678,916,523 Less:

Depreciation 73,507,753 52,795,946

Provision for Taxation 206,572,078 208,610,048

Fringe Benefit Tax - 9,000,000

Profit after tax 475,708,843 408,510,529

Balance of Profit from previous year 168,404,348 151,504,514 Add / (Less)

Tax adjustments for earlier years 3,403,713 8,688,402

Expenses in respect of Previous Year (66,670) (26,765)

Transferred to General Reserve 300,000,000 250,000,000

Proposed Dividend 154,132,056 128,443,380

Tax on Proposed Dividend 26,187,036 21,828,952

Surplus carried to Balance Sheet 167,131,142 168,404,348

OPERATIONS

The Global Economic Crisis witnessed in the later part of the last year impacted the executable order board for the first quarter of the year 2009-10. The corresponding sales therefore in the first quarter were lower by Rs.550 million and this shortfall could not be recouped through out the year. Thus your Company could register sales of Rs.4533 million during the year under report as against Rs.5185 million during 2008-09.

However, various measures undertaken to strengthen operations, costs reduction to improve bottom line have resulted in improvement in profit after tax from Rs.408 million of the previous year to Rs.475 million in the year 2009-10.

ENERGY CONSERVATION

Kirloskar Pneumatic, Hadapsar and Saswad Plant jointly participated in State & National level "Energy Management & Conservation Competition" organized by MEDA ( Maharashtra Energy Development Agency) and Cll (Confederation of Indian Industries) and bagged third prize &" Energy Efficient Unit Award" respectively.

Kirloskar Pneumatic, Hadapsar Plant bagged the "Third Prize" in Kirloskar Group Energy Conservation Competition, which was held among the Kirloskar Group Companies

DIVIDEND

The Board of Directors have recommended a dividend of Rs. 121- per Equity Share for the year ended March 31,2010 as against Rs. 10/- per Equity Share paid last year.

FIXED DEPOSIT

As on 31st March, 2010 there are no fixed deposits either outstanding or unclaimed.

PROSPECTS

The Gas Compression business is growing and your company is prepared to meet this challenge.

As a preferred supplier for Refrigeration & AC Packages yourcompany has bagged many prestigious orders during the year and has been selected for many more in the coming years.

During the year, 1 MW range wind turbine gearbox was successfully developed and we expect to commence serial production.

DIRECTORS

Mr. Sanjay C. Kirloskar expressed his inability to continue as the Chairman of the Company w.e.f February 24, 2010 due to other pre-occupations, but continues to act as the Director of the Company.

He was elected as the Chairman of the Company on July 6, 1999 and continued to act as Chairman of the Company over a decade.

The Board places on record its appreciation of the rich and varied experience, advise, counsel and guidance received during his tenure as the Chairman of the Company.

The Board unanimously elected Mr. Rahul C. Kirloskar as the Chairman of the Company w.e.f. March 9,2010.

Mr. J Y Tekawade and Mr P S Jawadekar retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

CORPORATE GOVERNANCE

The Company conforms to the norms of Corporate Governance as envisaged in the Listing Agreement with the Bombay Stock Exchange Ltd. A separate report on Corporate Governance, along with Statutory Auditors Certificate on the Compliance, Management Discussions and Analysis, is attached and forms part of the Annual Report.

STATUTORY DISCLOSURES

1. Conservation of Energy, Technology Absorption and Foreign Exchange

The information required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, pertaining to Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo, is given in the Annexure I to this Report and forms part of this Report.

2. Subsidiary Company

During the year Khosla Indair Limited a subsidiary of the company, ceased to be the subsidiary of the company.

3. Particulars of Employees

Information in accordance with sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, is given in the Annexure to the Directors Report. However as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to the Members of your Company excluding the aforesaid information. Any Member interested in obtaining the said annexure may write to the Secretarial Department at the Registered Office of the Company.

4. Directors Responsibility Statement

The Directors confirm that:

i. In preparation of Annual Accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently in order to show true and fair view of the state of affairs.

iii. The Directors have taken proper care in maintaining accounting records as per the provisions of the Companies Act, 1956, for safeguarding Companys Fixed Assets for preventing and detecting fraud and other irregularities.

iv. The Annual Accounts are prepared on the principle of going concern.

5. Cash Flow

A Cash Flow statement for the year ended March 31,2010 is attached to the Balance Sheet.

AUDITORS

The Auditors of the Company, M/s. Dalai & Shah, Firm Registration No. 102021W, Chartered Accountants, Mumbai, retire at the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The requisite certificate pursuant to Section 224(1-B) of the Companies Act, 1956 has been received.

EMPLOYEES

The Company follows pragmatic methods towards human resource retention and development. The human skill development part is taken care of through training programs. The training programs are designed in a systematic manner after identifying an individuals training needs. Cutting across the organizational hierarchy, training sessions are held for promoting team spirit and for addressing training needs. The motivation part is taken care of through empowerment and ensuring healthy working environment. The dual remuneration system assured as well as performance related; promotes talent within the Company. The Company endeavours to ensure that its different functions are adequately manned.

Employee relations achieved an important milestone with peaceful wage settlement signed with Workers Union on March 8,2010 for a period of 36 months effective from 1st January, 2010.

Industrial relations continued to be cordial during the year.

The Company had 985 permanent employees on its roll as on 31s" March, 2010.

ACKNOWLEDGEMENT

The Directors wish to convey their appreciation to all of the Companys employees for their efforts as well as their collective contribution to the Companys performance. The Directors would also like to thank the employees union, shareholders, customers, dealers, suppliers, bankers and all other business associates for the continuous support given by them to the Company and their confidence in its management.

For and on behalf of the Board of Directors

Place: Pune RAHUL C. KIRLOSKAR

Date : April 28, 2010 Chairman

 
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